LIFT & SHIFT INDIA P.LTD,MUMBAI vs. ASST CIT CEN CIR 7(1), MUMBAI

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ITA 6631/MUM/2018Status: DisposedITAT Mumbai15 January 2020AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that penalty under Section 271(1)(c) cannot be levied for concealment of income when the assessee had voluntarily disclosed all facts and acted on a bonafide belief. The agreement to the quantum addition does not automatically warrant a penalty.

What were the facts?

The assessee claimed exchange rate difference on imported equipment as revenue expenditure, relying on a Supreme Court decision. The assessee later agreed to treat this loss as an addition to the cost of the capital asset.

What were the issues?

Whether penalty under Section 271(1)(c) is justified for exchange fluctuation loss when the assessee acted on bonafide belief and disclosed all facts.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A”, BENCH

Before: SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM

For Appellant: Ms. Sindhu Giresh Bagwe
For Respondent: Shri Michael Jerald
Hearing: 07/01/2020Pronounced: 15/01/2020

आदेश / O R D E R

PER M. BALAGANESH (A.M):

1.

This appeal in A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-49, Mumbai in appeal No.CIT(A)-49/IT-58/2017-18 dated 20/08/2018 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271(1)(c).

M/s. Lift & Shift India Pvt. Ltd.,

2.

The only issue involved in this appeal is as to whether the ld. CIT(A) was justified in upholding the levy of penalty u/s.271(1)(c) of the Act in the facts and circumstances of the case.

3.

We have heard rival submissions. We find that assessee is engaged in the business of heavy transportation for which it had imported equipments by availing buyers credit facility from bank. The exchange rate difference between the date of import and the actual date of payment resulted in loss and the same was claimed by the assessee as revenue expenditure on a bonafide belief by placing reliance on the decision of the Hon’ble Supreme Court in the case of Indian Cements Ltd. vs. CIT reported in 60 ITR 52 (SC) wherein it was held that the purpose for which the funds have been utilised is not relevant. The entire factual matrix of assessee availing buyers credit facility from bank for importing equipments together with the workings for exchange rate difference thereon were duly placed on record before the lower authorities. During the course of proceedings, the assessee understood that since the exchange rate difference arose on account of import of equipments which were capital in nature and accordingly, agreed to the contention of the ld. AO that the exchange loss thereon should also add to the cost of depreciable asset. Accordingly, no appeal was preferred by the assessee

M/s. Lift & Shift India Pvt. Ltd., against the quantum disallowance made by the ld. AO. We find from the penalty order passed by the ld. AO u/s.271(1)(c) of the Act dated 30/03/2017 that ultimately, the penalty was levied for concealment of income by the ld. AO. We find that the entire factual matrix of arriving at the exchange fluctuation loss has been voluntarily and duly placed on record by the assessee in the return of income and in subsequent furnishing of details during the course of assessment proceedings and also the bonafide belief of the assessee by placing reliance on the decision of Hon’ble Supreme Court in the case of Indian Cements referred to supra. Hence, there cannot be any concealment of income that could be alleged on the assessee by the ld. AO warranting levy of penalty merely because the assessee had agreed to the quantum addition. If the contention of the revenue is to be accepted, then in every case wherever addition / disallowance has been made, it would automatically result in levy of penalty u/s 271(1)(c ) of the Act which would admittedly ignore the principles of bonafide belief and understanding of laws of the assessee. In these facts and circumstances, we have no hesitation in directing the ld. AO to cancel the levy of penalty in the sum of Rs.2,43,607/- u/s.271(1)(c) of the Act. Accordingly, the grounds raised by the assessee are allowed.

M/s. Lift & Shift India Pvt. Ltd.,

4.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on this 15/01/2020

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